Power Metal Regulatory News (POW)

8 July 2022

Power Metal Resources PLC

("Power Metal" or the "Company")

Disposal of Kanye Resources Interests - Botswana

Power Metal Resources plc (LON:POW), the London listed exploration company seeking large-scale metal discoveries across its global project portfolio announces the conditional disposal of its 50% interest in the Kanye Resources Joint Venture which is comprised of Kanye Resources Pty Limited a Botswana private company and Kanye Resources PLC a UK company, ("Kanye Resources JV" or "Kanye JV") to JV partner Kavango Resources PLC (LON:KAV)("Kavango") (the "Transaction").

Paul Johnson, Chief Executive Officer of Power Metal Resources PLC commented:

"Power Metal today announces a further step to crystallise value from its expansive project portfolio - through the disposal of our interest in the Kanye Resources JV back to partner Kavango.

"The crystallisation of value from various Power Metal interests is a process we expect to continue. In doing so, we increase the financial strength of the Company which will allow us to build a valuable and diverse portfolio of financial assets focused on the natural resource sector.

"Importantly, streamlining of the Company in this way allows us to focus our time and financial resources on a more targeted exploration portfolio.

"Our joint venture partnership with Kavango has continued for two years. In this time they have become, in our view, a Botswana junior resource powerhouse and with this transaction will see 100% ownership of their Botswana portfolio restored.

"The work to date on projects within the Kanye JV has demonstrated the potential for major metal discoveries and if successful, the value of our greatly expanded equity holding of Kavango will likely appreciate significantly. Additionally, as a result of this transaction, we gain further exposure to the upside potential of their work on the KSZ project where the exploration findings are increasingly of interest.

"Power Metal's journey with Kavango continues, however now as a strategic investor rather than JV partner. I look forward to ongoing news flow from Kavango and on behalf of all at Power Metal, wish the Kavango team well on their exciting exploration endeavours."

Transaction Highlights:

Subject to the publication of a new prospectus1 by Kavango including provision for this Transaction, Kavango will acquire all Power Metal interests in the Kanye JV for the following consideration:

- The issue to Power Metal of 60 million new ordinary shares of Kavango (Share Value of £1,200,000 using the closing price of 2p of Kavango shares on 07-07-2022) ("Consideration Shares"). The Consideration Shares will be subject to a lock-in agreement whereby they may not be sold within 12 months of today's date without Kavango approval.

- The issue to Power Metal of 60 million warrants to subscribe for new Kavango ordinary shares with a 30 month life to expiry from today's date (30 million at an exercise price of 4.25p and 30 million at an exercise price of 5.5p) ("Consideration Warrants").

- The issue to Power Metal of 15 million variable price warrants ("VP Warrants") with a six month life to expiry from today's date, with a minimum exercise price of 3p and an actual exercise price at a 15% discount to the volume weighted average share price on the date of exercise. Should all VP Warrants be exercised within 6 months, Power Metal will receive 15 million replacement warrants, on the same exercise terms and with a 12 month life to expiry from issue date ("Super VP Warrants").

- Power Metal will receive a 1% Net Smelter Return ("NSR") royalty across all Kanye licence areas as at today's date. In the event that Kavango is able to secure, within two years of today's date, a greater than 2% NSR or other royalty on any of the Kanye properties the total royalty above 2% would be split equally Power Metal/Kavango (e.g. a 3% NSR would see KAV/POW each receive a total 1.5% royalty).

- In the event that Kavango sells all or part of Kanye for in excess of £7.5 million, Power Metal will be paid a proportion of the gross excess received by Kavango above £7.5 million (the "Sale Premium"). The Sale Premium is 20% for 6 months from todays' date, 15% (7-12 months), 10% (13-18 months) and 5% (19-24 months).

Further Information

The Kanye Resources JV holds ten prospecting licences covering 4,257km2 in the Kalahari Copper Belt and 1,386km2 of ground over two licences representing the Ditau Camp Project.

Power Metal holds a current book value of £1,030,291 in respect of its 50% interest in the Kanye Resources JV.

As at 31 March 2022 Power Metal held a book value of £836,487 in respect of its 50% interest in the Kanye Resources JV. In the year ended 30 September 2021 Power Metal recorded an attributable loss of £80,010 in respect of its 50% interest in the Kanye Resources JV.

Power Metal currently holds 9.5 million Kavango shares and 4.75 million warrants to subscribe for new Kavango shares at an exercise price of 2.5p (expiry April 2023). On completion of this Transaction and issue of the Consideration Shares Power Metal therefore expects to hold 69.5 million Kavango shares. 

Assuming the current published Kavango issued share capital (435,462,052 shares) is diluted only by the Consideration Shares (60,000,000 shares) the total Kavango issued share capital would total 495,462,052 shares. In this scenario and on the basis of Power Metal's current Kavango shareholding, Power Metal would hold 14.03% of Kavango issued share capital.

Notes:

1 A Prospectus is required to cover the Kavango shares and warrants included as consideration in this transaction. The publication of the Prospectus requires submission to, and approval of, the UK Listing Authority ("UKLA"). This submission is expected to take place shortly. The timescale leading to publication of the prospectus is not definitive, however the Company expects this to by completed by early Q4 2022 at the latest. 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For further information please visit https://www.powermetalresources.com/ or contact:

NOTES TO EDITORS

Power Metal Resources plc - Background

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration company which finances and manages global resource projects and is seeking large scale metal discoveries.

The Company has a principal focus on opportunities offering district scale potential across a global portfolio including precious, base and strategic metal exploration in North America, Africa and Australia.

Project interests range from early-stage greenfield exploration to later-stage prospects currently subject to drill programmes.

Power Metal will develop projects internally or through strategic joint ventures until a project becomes ready for disposal through outright sale or separate listing on a recognised stock exchange thereby crystallising the value generated from our internal exploration and development work.

Value generated through disposals will be deployed internally to drive the Company's growth or may be returned to shareholders through share buy backs, dividends or in-specie distributions of assets.

Power Metal Exploration Programmes Underway/Results Awaited

Power Metal has exploration programmes completed or underway, with results awaited, as outlined below:

* reducing to 62.12% after Completion of the Pre-IPO Financing

# subject to completion of acquisition announced 18.5.22 interest will increase to 87.71%